CAG report: Karnataka’s return from investments in companies negligible

Karnataka’s return from investment of a whopping ₹61,727 crore in State-owned corporations was as low as ₹74.84 crore, said a report by the Comptroller and Auditor General (CAG).

In its report on ‘State Finance for the year ended March 2015’ tabled in the State Legislative Assembly on Wednesday, CAG said the investment included ₹25,007 crore (41 per cent) invested in corporations that made perennial losses.

The share of capital expenditure to total expenditure during the current year was 16 per cent, which was one percentage point less than the previous year.

The CAG has also assessed compliance to the provisions of the Karnataka Fiscal Responsibility (FRA) Act 2002 during 2010-15. “The government resorted to non-cash transactions, waiver of tax dues, grant-in-aid to institutions and book adjustments which had the impact pf helping them achieving the fiscal indicators as per the Act,” the report said.

The State continued to maintain revenue surplus during 2010-15 and kept fiscal deficit relative to Gross State Domestic Product (GSDP) below the limit laid down under the FRA Act as amended from time to time. During 2014-15, the State had a revenue surplus of ₹528 crore, an increase of ₹175 crore over the previous year.

The outstanding guarantees which formed contingent liabilities of the State were well within the prescribed limits as per the Guarantees Act.

On debt sustainability, CAG said that about 63 per cent of the open market borrowings are in the maturity bracket of seven years and above.

On the open market borrowings, CAG said the government has relied on availability rather than on need. The government debt steadily increased year after year as also the per capita debt during the period 2010-15. Supplementary provisions were not completely supported by the savings in other demands to make the transactions revenue neutral.

The ratio of the State’s tax revenue to GSDP showed an increasing trend from 2010-11 (9.4 per cent) to 2012-13 (10.30 per cent) and decreased to 10.20 per cent during 2013-14 and continued to be the same during current year (2014-15).

The ratio of non-tax revenue to GSDP was insignificant at 0.68 per cent during the 2014-15, implying the need for mobilising non-tax revenue in the coming years by revising user charges, as recommended by the Expenditure reforms commission.